Heard a rumor that the Altoona Railroaders' Memorial Museum filed for bankruptcy this week. Any truth to this story??? It would be a real shame for the museum community!

Funny you should say that, since I just read in the June issue of Railpace that their champion,
State politician Rick Geist, just announced some sort of government grant for that outfit. I'll have to dig that issue up for specifics.

Heard a rumor that the Altoona Railroaders'
> Memorial Museum filed for bankruptcy this
> week. Any truth to this story??? It would be
> a real shame for the museum community!


schwartzsj@juno.com

> Heard a rumor that the Altoona Railroaders'
> Memorial Museum filed for bankruptcy this
> week. Any truth to this story??? It would be
> a real shame for the museum community!

I checked the website of the Altoona Mirror newspaper. It has a scrowling banner that indicates that it will have an article on Sunday about "what went wrong with the finances at the Railroaders' Memorial Museum."

However, this website does not post either current or archive news stories.

I remember visiting the museum three years ago and my companions and myself wondered how the museum could continue with the level of staffing required. The only way would be for it to obtain operating funds from sources beyond the gate fees.

Altoona Mirror
bnorden49@earthlink.net

> Are they filing for Chapter 7 (liquidation)or Chapter 11 (reorganization)?

Its sort of weird to have a non-profit file for bankruptcy, especially Chap 7. They usually can appeal to membership for funds, labor, etc when there's financial problems. The other thing is that in a Chap 7, there'll usually be a limited market for the things that a non-profit owns. As the 614 & 2100 attest to, not a big market for big steamers these days...

Now for the big questions.. what does this mean or K-4s 1361 @ Scranton. Are the funds for repair held trust and not available to satify creditors claims-so that repairs will go on?

Question No. 2, assuming the repairs go on..you can bet that a bankruptcy judge/ creditors' committee is going to say something on the order of "not a chance" when they want to spend money to bring it home.

As a matter of trivia, Railroads cannot be forced into Chapter 7 and occupy a whole subsection of Chapter 11 (IV)



Cornell Law Bankruptcy Overview

I do not know all of the details, but about a decade (or more) ago the Tennessee Valley Railroad Museum went through bankruptcy protection.

Maybe, someone from TVRM can give us a brief overview. Being so long ago, I'm fuzzy about what happened; and it is not my story to tell. I am sure that younger people in railway preservation can gain from hearing the story.

Brian Norden

bnorden49@earthlink.net

> In 1981 TVRM borrowed $1.0 million through a sale of Industrial Development Bonds. This was so we could complete a number of projects prior to the opening of the 1982 Worlds Fair in nearby Knoxville. By 1982 several things were evident: We really needed $1.5 million to get everything done (although we did finish most of the shop and did get the turntable installed in East Chattanooga our Grand Juncition Depot was not finished), not too many people came to the worlds fair and even fewer came to TVRM. Those that did entered a construction zone. By the end of 1982 we were in default on the Bonds. After about two years of negotiating with the bank over repayment terms they grew tired and threatened to forclose. We went and asked for court protection and declared Bankruptcy. It took six to nine months to develop a repayment plan that the Court agreed to. (Among the problems was the fact that the Bankruptcy judge had to recuse himself at the bank's request because as a former Mayor of Chattanooga he had hijacked the "General" while it was on its back to Georgia). The payments would go up some every few years. At the end of the fifteen years the payments would be almost $10,000 per month.

About five years ago I negotiated a discounted payoff with the bank which ended the bankruptcy about three years early.

In a nutshell that's the story. It is harder to document the thousands of hours that went into managing TVRM through the process. At several junctures all could have been lost. Without the efforts of TVRM President (then and now) Bob Soule and his wife Joyce, who sweated over each month's payment while continuing to make improvements to TVRM (the Grand Junction Depot, wheel shop, expanded display area and numerous rolling stock projects where all completed during the bankruptcy)I don't think we would have survived.

Would we do it again? I don't know (I do know what Bob would say!). Debt financing can be an important part of an orgainzation's finacial structure particularly if the the debt can significantly advance the timetable for meeting certain goals. Similarly, debt financing makes sense if there is a high level of confidence that the project will produce the cash flow to carry the note (This is truce statement in both the for profit and not-for-profit business worlds). When you have to dig into current cash flow to fund the project, more care should be exercised to properly analyse the project.

Tim Andrews
Director of Development
TVRM

andrewstim@prodigy.net

Tim,

Thank you for your careful and through reporting of the situation that occured at TVRM.

Brian Norden
member OERM Board of Directors

bnorden49@earthlink.net